Most of the information I present here is from an op-ed in today's WSJ. It says the Senate may vote as early as this week on this legislation, which essentially is protectionism. It would allow US companies to request relief in the form of tariffs on a foreign competitor if the exchange rate is being unfairly manipulated. The Smoot-Hawley bill in the 1930s was an across the board increase in tariffs, this one is more selective. It sounds great to protect American jobs against currency manipulation, but there are unintended consequences to such actions. And this legislation allows for more picking of winners and losers for political rather than economic reasons, which opens the door to corruption.

Primarily this bill is aimed at the Chinese, who are no doubt going to retaliate if we take protectionist actions against them. Protectionism has a way of spreading, to the detriment of everyone involved. If you wanted to increase the chances for a world-wide recession/depression, this is an excellent way to do it.

Much has been made of China's efforts to hold down the value of their currency (yuan), but in fact the yuan has appreciated almost 30% since the middle of 2005. There are other economic forces at work besides the exchange rate, since our trade deficit with them is still high. And wages are rising there and in other developing countries, as are shipping costs to bring products here. Things are beginning to even out a little bit, and we should avoid getting the gov't involved in making such decisions unless there are clear cases of unfair practices from foreign competitors and countries.

This bill is a bad idea. But the democrats in the Senate are pushing it to appease the unions in return for voting for the free trade agreements with Columbia, Panama, and South Korea that Obama finally sent to the Congress. They are afraid of losing the Senate to the GOP, ditto the WH, who so far hasn't spoken out against the bill. And the repubs in the Senate won't block it either because Mitt Romney (the current frontrunner) has called for unilateral trade duties against China, in an effort to get himself elected. No telling what the GOP-controlled House will do, but I think they'll pass it too if they get the free trade agreements through as part of a deal. Protectionism is the populist thing to do in an eletion year, don't be surprised if this thing is enacted.

Most of the information I present here is from an op-ed in today's WSJ. It says the Senate may vote as early as this week on this legislation, which essentially is protectionism. It would allow US companies to request relief in the form of tariffs on a foreign competitor if the exchange rate is being unfairly manipulated. The Smoot-Hawley bill in the 1930s was an across the board increase in tariffs, this one is more selective. It sounds great to protect American jobs against currency manipulation, but there are unintended consequences to such actions. And this legislation allows for more picking of winners and losers for political rather than economic reasons, which opens the door to corruption.

Primarily this bill is aimed at the Chinese, who are no doubt going to retaliate if we take protectionist actions against them. Protectionism has a way of spreading, to the detriment of everyone involved. If you wanted to increase the chances for a world-wide recession/depression, this is an excellent way to do it.

Much has been made of China's efforts to hold down the value of their currency (yuan), but in fact the yuan has appreciated almost 30% since the middle of 2005. There are other economic forces at work besides the exchange rate, since our trade deficit with them is still high. And wages are rising there and in other developing countries, as are shipping costs to bring products here. Things are beginning to even out a little bit, and we should avoid getting the gov't involved in making such decisions unless there are clear cases of unfair practices from foreign competitors and countries.

This bill is a bad idea. But the democrats in the Senate are pushing it to appease the unions in return for voting for the free trade agreements with Columbia, Panama, and South Korea that Obama finally sent to the Congress. They are afraid of losing the Senate to the GOP, ditto the WH, who so far hasn't spoken out against the bill. And the repubs in the Senate won't block it either because Mitt Romney (the current frontrunner) has called for unilateral trade duties against China, in an effort to get himself elected. No telling what the GOP-controlled House will do, but I think they'll pass it too if they get the free trade agreements through as part of a deal. Protectionism is the populist thing to do in an eletion year, don't be surprised if this thing is enacted.

Click to expand...

if this is enacted, we will not revoer for years.
China will undoubtedly retaliate...and we most certainly can not afford any type of financial war right now.

Why do our politicans feel it is appropriate to market their initiatives by only touting the positives?

Why cant they present the pros and cons and let the people offer their opinion?

The right will argue this initiative and the left will spin it by saying that the right only cares about the large corporatioins that conduct business with the Chinese...and it will ultimately pass and when it pans out for the worse, we will hear something like:

This is from the AP, by way of Yahoo. I know there are many who believe we need to protect American jobs and industries, very understandable. But policies that preclude free trade between counteies are always losing propositions for everybody. At a time like this when the global economy is not exactly robust, such actions could be particularly deletorious.

People have got to understand that when you take action to protect one industry or group, there are always negative effects somewhere else, usually worse than what was gained.

FYI - last night the Senate passed this bill 79-19. Apparently there are at least 60 repubs and 158 dems in the House who have signed on to sponsor the bill, which should mean it would pass through the House easily. Boehner has HINTED that he might not allow the bill to reach the House floor for a vote, saying how dangerous this legislation could be and that this is "well beyond what Congress should be doing".

Not sure he could or would stand up against this bill for very long, it's very populist and no doubt a great many of his repub colleagues don't want to give their dem opponents something like this to beat them up with. So, politics trumps good economic policy, and both sides are responsible.

Granny says, "Well, thank ye - we appreciate dat...Yuan has appreciated, more needs be done -White HouseWed Oct 5, 2011 WASHINGTON (Reuters) - The White House on Wednesday voiced concern that legislation the US Senate is expected to approve this week designed to press China to let its currency rise could violate international trade rules.

While reiterating that it shared lawmakers' desire to ensure that U.S. workers and businesses face a level playing field when competing with China, the White House hardened its criticism of the legislation, which has drawn trade war warnings from Beijing. "We certainly ... have concerns about this particular legislation, and whether or not it would create consistency issues with our international obligations," White House press secretary Jay Carney told reporters. "We have, from the beginning as an administration, worked on the issue of the undervalued Chinese currency. And it has appreciated to some degree as a result, we think, of those efforts. More needs to be done," he said.

Many economists say China holds down the value of its yuan currency to give its exporters an edge in global markets. China says it is committed to gradual currency reform and notes that the yuan has risen 30 percent against the dollar since 2005. The Democratic-controlled U.S. Senate on Thursday is expected to approve the controversial Currency Exchange Rate Oversight Reform Act of 2011. The bill would then go to the House of Representatives, whose Republican leader underscored the bill's uncertain prospects on Tuesday by calling it "dangerous" and questioning whether it was the best approach. "I think it's pretty dangerous to be moving legislation through the United States Congress forcing someone to deal with the value of their currency," House of Representatives Speaker John Boehner, who has the power to prevent debate in his chamber, told reporters.

HIGH UNEMPLOYMENT

Democratic Senator Sherrod Brown, one of the bipartisan bill's authors, said he was confident the Senate would vote on the bill on Thursday with minimal opposition from lawmakers keen to take action to bring down stubborn U.S. unemployment. On Monday, the U.S. Senate voted 79-19 to start debate on the bill, which calls for U.S. tariffs on imports from countries with deliberately undervalued currencies, prompting an angry rebuke from China. Brown pointed to that procedural vote as a sign the bill would easily clear the Senate. "This bill doesn't cost taxpayer dollars. It actually will help reduce the budget deficit, so ... other than those who want to stand with companies that outsource jobs to China, I don't see where any real opposition to this bill should come from," he said.

Fred Bergsten, director of the Washington-based Peterson Institute for International Economics, estimates that a 20 percent rise in the yuan would reduce the U.S. trade deficit by $50 billion to $100 billion. At a gain of about 6,000 jobs for every $1 billion improvement in the trade balance, $100 billion would work out to 600,000 jobs. But other economists argue that a stronger yuan would simply shift manufacturing to other low-cost producers such as Bangladesh or Vietnam, and not benefit the United States. U.S. steel and other domestic manufacturers are hurt by the artificially-low yuan, while consumers benefit from lower prices on household goods. Most major business groups oppose the bill, which they say will cause more harm than good.

FYI - last night the Senate passed this bill 79-19. Apparently there are at least 60 repubs and 158 dems in the House who have signed on to sponsor the bill, which should mean it would pass through the House easily. Boehner has HINTED that he might not allow the bill to reach the House floor for a vote, saying how dangerous this legislation could be and that this is "well beyond what Congress should be doing".

Not sure he could or would stand up against this bill for very long, it's very populist and no doubt a great many of his repub colleagues don't want to give their dem opponents something like this to beat them up with. So, politics trumps good economic policy, and both sides are responsible.

Click to expand...

We did just fine with Tariffs and no Federal Reserve from 1789 - 1913.

Most of the information I present here is from an op-ed in today's WSJ. It says the Senate may vote as early as this week on this legislation, which essentially is protectionism. It would allow US companies to request relief in the form of tariffs on a foreign competitor if the exchange rate is being unfairly manipulated. The Smoot-Hawley bill in the 1930s was an across the board increase in tariffs, this one is more selective. It sounds great to protect American jobs against currency manipulation, but there are unintended consequences to such actions. And this legislation allows for more picking of winners and losers for political rather than economic reasons, which opens the door to corruption.

Primarily this bill is aimed at the Chinese, who are no doubt going to retaliate if we take protectionist actions against them. Protectionism has a way of spreading, to the detriment of everyone involved. If you wanted to increase the chances for a world-wide recession/depression, this is an excellent way to do it.

Much has been made of China's efforts to hold down the value of their currency (yuan), but in fact the yuan has appreciated almost 30% since the middle of 2005. There are other economic forces at work besides the exchange rate, since our trade deficit with them is still high. And wages are rising there and in other developing countries, as are shipping costs to bring products here. Things are beginning to even out a little bit, and we should avoid getting the gov't involved in making such decisions unless there are clear cases of unfair practices from foreign competitors and countries.

This bill is a bad idea. But the democrats in the Senate are pushing it to appease the unions in return for voting for the free trade agreements with Columbia, Panama, and South Korea that Obama finally sent to the Congress. They are afraid of losing the Senate to the GOP, ditto the WH, who so far hasn't spoken out against the bill. And the repubs in the Senate won't block it either because Mitt Romney (the current frontrunner) has called for unilateral trade duties against China, in an effort to get himself elected. No telling what the GOP-controlled House will do, but I think they'll pass it too if they get the free trade agreements through as part of a deal. Protectionism is the populist thing to do in an eletion year, don't be surprised if this thing is enacted.

Click to expand...

if this is enacted, we will not revoer for years.
China will undoubtedly retaliate...and we most certainly can not afford any type of financial war right now.

Why do our politicans feel it is appropriate to market their initiatives by only touting the positives?

Why cant they present the pros and cons and let the people offer their opinion?

The right will argue this initiative and the left will spin it by saying that the right only cares about the large corporatioins that conduct business with the Chinese...and it will ultimately pass and when it pans out for the worse, we will hear something like:

Dont blame us. The Chinese refused to cooperate.

Click to expand...

I think you both are underestimating the situation. The United States is China's customer. When we choose to start shopping elsewhere they will do what a business does with competition, they will either lower prices, or they will go bankrupt.

The worst thing they can do to us is make us pay our bills, which isnt such a bad thing.

China not gonna be happy...Senate Passes China Currency BillOctober 11th, 2011 : The Senate has passed a bill that could bring sanctions against China or any country found to be deliberately manipulating the value of its currency.

The measure would open the door for U.S. sanctions if the Treasury Department finds a country is manipulating its currency and not taking steps to fix it. It also would make it easier for U.S. companies to seek tariffs on foreign imports. Many U.S. lawmakers say Chinese currency manipulation gives its goods an unfair advantage on world markets by making U.S. products too expensive. Opponents to the bill say they fear it could start a trade war with China.

China calls the bill a serious violation of World Trade Organization rules. The official Xinhua news ageny said the bill may ignite a trade war. Beijing denies deliberately undervaluing the yuan. It says it is taking steps to let its value rise and fall naturally against the dollar.

The bill now goes to the House of Representatives, where passage is uncertain. Republican Majority Leader Eric Cantor is asking the White House to take a formal position on the bill before the House considers it. President Barack Obama has not officially come out for or against the measure. But the White House says it wants to be cautious and make sure any new law does not violate WTO .

China not happy...China to US on currency bill: I wouldn't do that if I were youOctober 12, 2011 - The US Senate passed a currency bill that would punish countries that subsidize their exports by maintaining an artificially low exchange rate. China called such a law a 'lose-lose' for both sides.

China left no doubt Wednesday as to what it thought of a new US Senate bill aimed at forcing Beijing to strengthen the value of its currency: The Central Bank devalued it as much as it could. The bill, passed Tuesday evening, will not solve US economic and employment problems and will only disturb efforts to promote world economic recovery, said Chinese Foreign Ministry spokesman Ma Zhaoxu in a statement.

Reflecting growing anger in the US about the loss of jobs to China, the Senate passed a bill that would punish countries that subsidize their exports by maintaining an artificially low exchange rate. Washington has long been pressing Beijing to let its currency rise, making US goods cheaper in China and thus helping US exports.

Administration officials say they support the bills goals, but worry that it might violate US obligations under World Trade Organization rules. The bill is not expected to pass the House of Representatives, where Speaker John Boehner has called the legislation dangerous.

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